Baxter International Inc. (NYSE: BAX), a global leader in medical technology, announced today its financial results for the third quarter of 2024, highlighting strong performance despite ongoing challenges.
“Despite facing some headwinds, Baxter delivered positive results in the third quarter as we continue to execute on our strategic transformation,” said José (Joe) E. Almeida, Chair, President, and CEO of Baxter. “The planned sale of our Kidney Care business marks a significant milestone in our journey, and we are making good progress with recovery efforts following Hurricane Helene’s impact on our North Cove, North Carolina, facility. While the storm’s aftermath will affect our near-term financial outlook, we remain confident in Baxter’s growth trajectory.”
Third-Quarter Financial Highlights
- Total Worldwide Sales: Baxter posted total worldwide sales of $3.85 billion in Q3 2024, including $2.70 billion from continuing operations and $1.15 billion from discontinued operations. Adjusting for the divestiture of the BioPharma Solutions (BPS) business and the Kidney Care segment, total sales grew by 4% year-over-year, both on a reported and constant currency basis.
- Continuing Operations: Sales from continuing operations were $2.70 billion, a 4% increase compared to the same period last year. This growth was driven by strong performance across all segments:
- Medical Products & Therapies: Up high single digits, driven by strong demand and the successful U.S. launch of the Novum IQ large volume infusion pump.
- Healthcare Systems & Technologies: Sales grew low single digits, with strong U.S. performance in the Care & Connectivity Solutions (CCS) division, although international sales in CCS and the Front Line Care division faced challenges.
- Pharmaceuticals: Low single-digit growth, bolstered by double-digit growth in the Drug Compounding division, partially offset by a decline in Injectables & Anesthesia sales.
- Discontinued Operations: Kidney Care, now reported as discontinued operations, posted mid-single-digit growth due to strong demand and pricing for acute therapies and peritoneal dialysis products.
- Earnings: Net income attributable to Baxter was $140 million, or $0.27 per diluted share. Adjusted earnings, excluding special items, were $0.80 per diluted share, exceeding the company’s initial guidance.
Hurricane Helene Recovery at North Cove Facility
In September 2024, Baxter’s North Cove facility in western North Carolina was severely impacted by Hurricane Helene, causing flooding and temporary production shutdowns. However, Baxter’s team has worked quickly to bring the facility back online. The highest-throughput IV solutions manufacturing line, which represents approximately 25% of the site’s production, has already restarted, with shipments expected to begin by the end of November—ahead of initial expectations.
“We are incredibly proud of the North Cove team’s resilience, and we continue to work closely with the FDA and local agencies to ensure a steady recovery,” said Almeida. While the company does not yet have a timeline for full restoration, Baxter is progressing with repairs and testing across all other production lines.
Kidney Care Sale Update
In August 2024, Baxter announced that it had entered into a definitive agreement to sell its Kidney Care business to Carlyle for $3.80 billion. The sale is expected to close in late 2024 or early 2025, pending regulatory approvals. The deal marks a key step in Baxter’s ongoing strategic transformation, positioning the company for further growth in its remaining core businesses.
Baxter expects net after-tax proceeds of $3.15 to $3.25 billion from the sale, which will be used to further strengthen its financial position. Following the sale, Baxter plans to mitigate any stranded costs through transition service agreements and cost containment initiatives. The company expects to fully offset these costs by 2027.
Outlook for 2024
Baxter remains confident in its long-term growth and transformation strategy. The company has reaffirmed its previously issued guidance for the full year 2024 and continues to expect a solid financial performance, driven by the strong results from continuing operations and the strategic divestitures in progress.
Conclusion
Baxter’s third-quarter results reflect continued execution of its strategic transformation, including strong sales growth in its core businesses and ongoing efforts to recover from Hurricane Helene’s impact. The pending sale of its Kidney Care business, combined with the recovery of the North Cove facility, positions the company for future success as it advances its mission to deliver essential healthcare solutions worldwide.
